Funded Trust

Definition - What does Funded Trust mean?

A funded trust, also called a trust fund, is comprised of different assets such as stocks, cash, bonds, and properties to name a few. As a legal entity that holds different kinds of assets, there are three key players which include the grantor, beneficiary, and the trustee. A grantor establishes the trust fund to ensure the financial security of the beneficiary—usually a child or organizations—until a certain age or a particular event occurs. Trustees, on the other hand, manage the fund to meet the trust fund’s specifications.

Insuranceopedia explains Funded Trust

There are many reasons why people create a funded trust. Unlike a will that becomes a public record after you die, a funded trust remains private. It can also provide distribution for a long period of time. For instance, the trust can provide a monthly living allowance to your beneficiary once they reach a predetermined age. There are different categories of a trust fund. The common types of trust funds include irrevocable trust, revocable trust, and charitable remainder trust. An irrevocable trust fund is something that cannot be changed while revocable trust fund, also called a living trust, allows the grantor to move and add assets during their lifetime. Lastly, the charitable remainder trust is designed to distribute the assets to a specific organization or charity at the end of trust.